Capping IT Off

The invisible hand

Only a few people know that I actually love economics, more specifically macro-economics. I love the theories from economists like Pareto, Keynes, Friedman, Ricardo and of course Adam Smith. The latter one’s theory of the so-called “Invisible hand” is one of my favorites since I am quite liberal. Not as extreme as a good friend of mine who has very interesting ideas about a society where the government has almost no involvement at all, I am still a supporter of little government intervention.
Before you point out to me that societies where there is little government intervention are often far from ideal because it does not take care of the less fortunate members of the society, I acknowledge that in real life this does not work out quite as I would like to see. We do not live in a perfect world, where the market is fully transparent, where everyone is honest and is not only focused on money-making. So, often these economic theories do not seem to work quite well as expected.
Why do I tell you that? Not to change the direction of this blog into something like Freakonomics (must read by the way!), but because it relates a bit to my love for self-organizing chaos. Adam Smith’s “The wealth of nations” really focuses on the idea that free markets only appear to be chaos, but there is an “invisible hand” that guides the production and price setting to an optimum.
I am at the moment for three months in Mumbai to lead the RightShore operations from my practice and while observing the traffic, it appears to be utter chaos. People don’t use their reverse mirrors nor direction indicators, but it still “somehow magically” works. Most likely that there are a set of traffic rules, but nobody seem to follow them. How do they manage to drive without constant bumping? Honking and good faith! When you want to overtake someone from the left, you honk. When you overtake someone from the right, you honk. When you think the person before you is going too slow, you honk. When someone is getting too close, you honk. When you… anyway you get the picture.
So, without the need of an enforcing strong hand, each individual seems to take up the responsibility to warn others, by honking, of possible collisions and other dangerous situations. Isn’t this brilliant? When you take a step back from this economic blabla and look at the software industry, you see this idea of not having one central enforcing entity, but shifting responsibility to the participants coming back in similar or reduced forms. Think about distributed source code management tools like GIT or Mercurial or the open source community. The reason why it does seem to work is because they all have an interest in reaching an optimal situation where everything works out nicely, just as the drivers in Mumbai have an interest in not bumping to other cars. True, you often do have a strong “hand” in open source projects, look at Linus Torvalds at the Linux Kernel project, but there are plenty of open source examples where it is more a community-driven project without too many dominating people.
However, I do wonder to what extent this works? It seems to work for a city of 16 million people in Mumbai, but to what extend can you keep on doing this in (open source) software projects? A huge project as the Linux Kernel, would it be possible without having a leader person? And does a leader person necessarily needs to be of a strongly enforcing type? Could this actually work for a commercial software project as well, or is that doomed to fail? Please share your thoughts.